October 13, 2018 / 12:23 AM / 10 months ago

UPDATE 1-BMO Harris Bank agrees to settle fraud claims against acquired unit

(Adds BMO Harris’ response)

Oct 12 (Reuters) - BMO Harris Bank NA will pay $10 million to resolve allegations against Marshall & Ilsley Bank, which it bought in 2011, that the bank facilitated fraud by Minnesota businessman Thomas Petters, the Department of Justice said on Friday.

The settlement involves no determination of liability, the DOJ said, adding that the settled claims relate exclusively to conduct by M&I Bank prior to its acquisition by BMO Harris.

“While we dispute the allegations in this matter, we’re pleased that it has come to a conclusion. We note that the allegations related to activity that ended before we acquired M&I in 2011,” BMO Harris, whose parent company is Bank of Montreal, said in an e-mailed statement.

“M&I co-operated fully with law enforcement, and no charges were brought against the bank,” it said.

A federal jury in 2009 found Petters guilty of orchestrating a $3.65 billion Ponzi scheme, and he was sentenced to 50 years in prison.

Prosecutors alleged that Wisconsin-based Marshall & Ilsley Bank staff knowingly made false promises to Petters’ investors that they would monitor and protect accounts holding proceeds from their investment. This facilitated Petters’ scheme and resulted in millions of dollars in losses to investors, the DOJ said (Reporting by Vibhuti Sharma and Bhanu Pratap in Bengaluru; Editing by Cynthia Ostermanand Leslie Adler)

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